Why Invesco QQQ Trust Gained 11% in November

Exchange traded funds (ETFs) rarely move by double digits in a month. Invesco QQQ Trust (QQQ 0.25%) November. ETFs track: Nasdaq 100 The index of the 100 largest non-financial Nasdaq stocks is seeing gains in the technology sector. The majority of the ETF is comprised of the “Magnificent Seven” stocks. apologize, microsoft, alphabet, Amazon, nvidia, meta platformand tesla.

In November, Invesco QQQ Trust gained 11%, according to data from S&P Global Market Intelligence. As you can see in the chart below, the ETF is up slightly. S&P 500.

QQQ data from YCharts

Several stocks moved the needle.

The QQQ ETF has a long track record of outperforming the S&P 500, and that dominance was seen once again last month. As an ETF that holds many stocks, there is no single reason why QQQ confidence soared last month, but macroeconomic news was a key factor. The ETF soared earlier this month on encouraging employment data and a strong earnings report. They spiked again on November 14 after the October inflation report came in cooler than expected, a sign that the rate hikes may be coming to an end. By the end of the month, some surveys showed that most investors now expect the Federal Reserve to cut interest rates in the first half of next year, which has also helped stocks rise.

Here are the top performers in the ETF last month: data dog, Enphase Energyand PDD Holdings, Pinduoduo and Temu’s parents. But most of the growth has been driven by big tech companies. That’s because about 42% of the fund’s value comes from Magnificent Seven stocks, which have been strong for most of the past month.

What’s next for QQQ?

This ETF is too diversified to be moved by single company-specific events, so it must continue to trend across the broader macroeconomic environment.

Because the QQQ ETF is weighted in growth stocks, it is likely to be more sensitive to interest rates than the overall market, so signs of falling or rising interest rates will help move the ETF higher. Still, there is a lot of uncertainty in the market heading into 2024, and many of QQQ’s largest tech stocks are trading at expensive valuations.

But with investors still excited about the potential of artificial intelligence, the ETF looks like a good bet to continue outperforming the S&P 500.